Good morning, traders.
The U.S. House just barely pushed through Trump’s so-called “big, beautiful” tax bill.
But behind the buzzwords and last-minute amendments is a monster that could have serious teeth for the market.
If it gets through the Senate, this thing will balloon the national deficit and jack up the debt ceiling.
It could add more than $3 trillion in new red ink over the next decade, per the Congressional Budget Office.
And traders are already seeing the ripple effects — just not with stocks.
Here’s the signal traders shouldn’t ignore.
Bond Market’s Red Flag Is Waving
The bond market is screaming bloody murder, while the stock market keeps pretending everything’s fine.
But it’s not fine.
Rates keep climbing.
We’re now staring down some of the highest 30-year yields we’ve seen since 2007.
That’s not just a technical note for finance geeks.
That’s the market pricing in a new reality.
This bill is bloated, bad for the deficit, and a gut punch to U.S. creditworthiness.
Treasury Secretary Scott Bessent has been saying all year his top priority is to bring down 10-year yields.
Well … if that’s the goal, the current policy is flunking hard.
You can’t push yields lower when you’re lighting a bonfire under government spending and piling on more debt.
What This Means for Stocks
Meanwhile, traders might be scratching their heads.
Why aren’t stocks reacting more?
Here’s why: The equity market is still in wait-and-see mode.
But that patience has a shelf life.
The minute higher rates start choking off consumer spending, home-buying, and corporate borrowing, earnings will get hit.
And that’s when stocks will take notice.
This is the slow-boil setup that can easily turn into a full-blown recession by year-end.
Consumers are already getting pinched by credit card debt and housing costs.
Add in more rate pressure and that’s a double whammy.
Better Be Awake and Aware
This bill might look like political theater, but the market is pricing in real consequences.
The bond market is already ahead of the curve.
Stocks won’t stay in la-la-land forever, so don’t get caught flat-footed.
This is the time to be alert, tactical, and ready to move when the dam breaks.
I’ll be watching closely for any shift in rhetoric from the Treasury.
Because if they keep fumbling this, recession isn’t just on the table.
It’s the next course.
Stay street smart,
— Jeff Zananiri
Join me this Saturday at noon ET to see how my Overnight AI Power Plays are targeting a market trigger most traders overlook — the same one Wall Street pros use when volatility ramps up.
If you want in before the next big spike, don’t miss this.
*Past performance does not indicate future results.
